Whitney Tilson’s email to investors discussing his friend’s attempt to explain Elon Musk’s latest moves.
From a friend:
On Thursday (April 11), Musk reaches out to grant Lex Fridman a podcast interview, immediately. It gets published the next morning, Friday April 12. In this interview, Musk makes various impossible claims, including that Tesla cars appreciate in value, not depreciate.
On Friday evening, Musk’s plane heads up from its home base at Van Nuys to San Jose (Tesla HQ and factory both nearby). It’s on the ground for approximately 4 hours before returning.
On Saturday, Musk is on twitter for several hours, attacking everyone from WSJ to Bloomberg to Big Oil. Numerous claims are made that are asinine to the SEC’s case against him, and the contempt charges that are now in front of Judge Nathan.
On Sunday late afternoon, Musk’s plane again flies up to SJC and is on the ground for four hours before returning.
On Monday (April 15), Musk’s plane flies to Colorado, close to where his brother Kimbal lives, and then returns five hours later.
Meanwhile, we have “lead independent board member” Antonio Gracias’ plane flying to California from his home in Chicago on Monday too. Also, the Murdoch jet heads to California from New York. Jim Murdoch is on Tesla’s board.
Next up: The (joint Musk-SEC) letter to Judge Nathan is due Thursday, April 18. Has the SEC basically yielded, and will allow Musk to say whatever he wants? That’s what the stock being up 2% today might suggest.
All other indications are that something big is going down. I don’t know that it is. Will Elon step down as CEO and replace himself with his brother? Will Elon transfer his Tesla equity stake to his brother? Again, I don’t know.
Almost anything is possible here, but whatever it is, we will know by the end of next week, and this Thursday (April 18) should give us a strong clue.
Whatever is about to happen, sparks will fly. I don’t know in which direction, but I do think that there is a lot more downside potential for TSLA here, than there is upside. Sales have started out badly in April, down 75% from last month, as measured by the geographies from which we have government registration data.
Tesla won’t be down 75% this quarter -- and maybe not even down at all. But keep in mind, that Tesla was down 31% in Q1 and really needs to recover most of that in order to get back on footing. It needs to be up around 50% to have any realistic prayer of meeting the low end of the guidance for the year. Right now I think Tesla may be able to be up 15% or so this quarter -- nowhere near the required 50%.
Either way, all of this is happening at the cost of falling prices and falling margins, hurting the bottom line materially. That’s why almost all analysts have come out and lowered their numbers for the 2019 calendar year. Many or even most analysts have lowered their EPS estimates for the year by over 50% from where they were on December 31.